THE GUERNSEY FOUNDATION Flexible and bespoke
INSURANCE
INVESTMENT FUNDS
TRUST & COMPANY
PENSIONS
INVESTMENT MANAGEMENT
BANKING
THE GUernsey foundation The Foundations (Guernsey) Law, 2012, came into force from 8 January 2013. The introduction of the Guernsey foundation provides clients with a solution to use alongside or instead of a trust. Guernsey has a strong association with the trust, a common-law concept which is familiar to those in the Anglo-Saxon world of the UK, US and Canada. However, the trust is less well understood in civil law jurisdictions such as continental Europe and some of the emerging markets which are the major sources of new private and corporate wealth. The introduction of Guernsey’s Foundations Law gives service providers an added level of flexibility and an extra tool on the menu of options available for best meeting client needs.
Why a foundation?
ASSET PROTECTION
WEALTH PLANNING
CHARITY
dynastic planning
CORPORATE restructuring
The Guernsey foundation is a very useful structure for asset protection, wealth planning and succession planning when combined with the island’s experience and administrative excellence. Guernsey will also see foundations being established for philanthropic purposes. A foundation is also useful for corporate entities looking to create an orphan structure: one where the assets of a particular entity can be held in a foundation rather than by a company. This means that the foundation may be used in investment fund structuring as well as for other corporate purposes.
The Guernsey foundation is an incorporated entity with a separate legal personality. However, it does not have shareholders to whom the board are accountable. Instead, the foundation holds assets (in its own name) on behalf of beneficiaries, particular purposes, or both, in accordance with the foundation’s constitution.
exists in perpetuity
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The foundation’s constitution comprises a charter setting out the foundation’s purposes, initial assets and duration (which may be unlimited) as well as rules prescribing, among other things, the functions of the council and procedures they must follow.
The Guernsey Foundation
Separate legal personality
In Guernsey, the founder’s role is flexible but perhaps more restrictive than in some other jurisdictions. Guernsey has taken an approach which will be familiar to those versed in the traditional civil law model where the foundation not only has a separate legal personality but also a legal personality that is independent of the founder. This helps to clarify the appropriate tax treatment for the founder in their own country of residence.
Some clients may worry that because foundations are registered entities they are, unlike trusts, publicly visible. However, under Guernsey law, only limited details are publicly available and while the whole charter is filed with the Guernsey Registry it is not visible to all.
confidential
Beneficiaries may be enfranchised or disenfranchised
This limited visibility is of great benefit when dealing with third parties (such as banks) to be able to quickly prove the entity’s existence.
A particular innovation of the Guernsey foundation is the ability for beneficiaries to be classed as either being ‘enfranchised’ or ‘disenfranchised’. Enfranchised beneficiaries will have rights to certain information regarding the foundation, whereas disenfranchised beneficiaries are not.
Conclusion Guernsey offers various solutions to meet client needs but where a foundation is most appropriate then the Guernsey foundation - the combination of the jurisdiction and specific provisions in the new law - can offer benefits compared to others already in the market.
Establishing a Guernsey foundation To establish a Guernsey foundation, contact one of the corporate service providers listed within the business directory at weareguernsey.com
All information correct as at 31 July 2016.
weareguernsey.com
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weareguernsey.com +44(0) 1481 720 071
info@weareguernsey.com
Guernsey Finance, PO Box 655, St Peter Port, Guernsey, GY1 3PN
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